Realogy Holdings Corp and SIRVA remain locked in a legal battle after SIRVA called off a $US400m agreement to acquire Realogy’s relocation business, Cartus.
SIRVA had arranged to buy Cartus in an agreement made in November 2019, but now claims that the COVID-19 pandemic has impacted on Cartus to such an extent that it would be unable to fulfil the criteria for successfully completing the deal. SIRVA also alleged that Realogy is close to insolvency and may not remain a going concern for long enough to complete.
Realogy filed a lawsuit against SIRVA’s owners, Madison Dearborn Partners (MDP) and SIRVA Worldwide, to enforce the deal, and issued a statement saying: ‘Realogy strongly believes that all conditions to closing of the transaction have been and continue to be satisfied, and that MDP and SIRVA have made false claims in an attempt to avoid their obligations under the purchase agreement in light of broad-based economic uncertainties due to the global COVID-19 pandemic.’ The company said it believed it had satisfied all closing conditions and financial information to meet its obligations under the purchase agreement, and that SIRVA was ‘asserting a series of claims Realogy believes to be false’.
According to reports, Realogy states SIRVA is using the coronavirus pandemic as a “material adverse event”, which is a clause in the Cartus purchase agreement.
‘Realogy strongly disagrees with SIRVA’s position and will pursue all legal remedies to ensure that SIRVA and MDP honour the commitments made under the purchase agreement,’ it said.
SIRVA issued a statement saying the business had been ‘working diligently to successfully complete the acquisition of Cartus Relocation Services’, but that it believed ‘certain closing conditions that they are obligated to meet under the purchase agreement have not been, and cannot be, satisfied.’ It added that Realogy’s complaint ‘addresses none of the issues raised by us’ and ‘we believe the complaint constitutes a breach by Realogy of the purchase agreement’.
Realogy issued a motion calling for quick resolution with a trial in September, but this was rejected by the court.